Oei Presents The Tax Lives Of Uber Drivers Today At Pepperdine, UC-Irvine

Shuyi Oei (Tulane) presents The Tax Lives of Uber Drivers: Evidence from Internet Discussion Forums (with Diane Ring (Boston College)) today at Pepperdine (as part of our Tax Policy Workshop Series funded in part by a generous gift from Scott Racine) and UC-Irvine (as part of its Tax Law and Policy Colloquium Series hosted by Omri Marian):

In this Article, we investigate the tax issues and challenges facing Uber and Lyft drivers by studying their online interactions in three internet discussion forums: Reddit.com, Uberpeople.net, and Intuit TurboTax AnswerXchange. Using descriptive statistics and content analysis, we examine (1) the substantive tax concerns facing forum participants, (2) how taxes affect their driving and profitability decisions, and (3) the degree of user sophistication, accuracy of legal advising, and other cultural features of the forums.

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Aprill Presents The Section 527 Obstacle to Meaningful Section 501(c)(4) Regulation Today At Pepperdine

Ellen P. Aprill (Loyola-L.A.) presents The Section 527 Obstacle to Meaningful Section 501(c)(4) Regulation, 13 Pitt. Tax Rev. 43 (2015), at Pepperdine today as part of our Tax Policy Workshop Series funded in part by a generous gift from Scott Racine:

As is well known, on May 10, 2013, at a session of the American Bar Association Tax Section meeting in Washington, D.C., Lois Lerner, at the time the director of the Exempt Organization Division of the Internal Revenue Service (IRS or Service), apologized for IRS mishandling of applications by Tea Party groups for exemption as social welfare groups under section 501(c)(4) of the Internal Revenue Code. A few days later, the Department of the Treasury (Treasury) Inspector General released a report (TIGTA Report) concluding that the “IRS used inappropriate criteria that identified for review Tea Party and other organizations applying for tax-exempt status based upon their names or policy positions instead of indications of potential political campaign intervention.”

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Brooks Presents Quasi-Public Spending Today At Pepperdine, UC-Irvine

John R. Brooks (Georgetown) presents Quasi-Public Spending, 104 Geo. L.J. ___ (2016), today at Pepperdine (as part of our Tax Policy Workshop Series funded in part by a generous gift from Scott Racine) and UC-Irvine (as part of its Tax Law and Policy Colloquium Series hosted by Omri Marian):

The United States has increasingly designed certain public spending programs not as traditional tax-financed programs, but rather as mixtures of private expenditures, subsidies, and limited taxes. Thus part of what could have gone to the government as a tax is instead used to purchase the good or service directly, with only incremental taxes and subsidies to manage distributional goals. This Article terms this “quasi-public spending,” and argues that it is descriptive of our evolving approaches to both health care and higher education.

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Chodorow Presents Bitcoin, Foreign Currency, And The Case For Basis Pooling Today At Pepperdine

Adam Chodorow (Arizona State) presents Bitcoin, Foreign Currency, and the Case for Basis Pooling at Pepperdine today as part of our Tax Policy Workshop Series.  The Pepperdine Tax Policy Workshop Series funded in part by a generous gift from Scott Racine:

The IRS recently dealt a blow to bitcoin enthusiasts by ruling that Bitcoin and other similar currencies should be treated as property – and not foreign currency – for income tax purposes. As a result, those who use bitcoin to purchase goods or services must report gain or loss on each transaction if the bitcoin has changed value between the time it was acquired and spent. The IRS’s decision seems correct as a matter of positive law, but laws can always be changed.

In this Article I consider whether bitcoin should be treated as a foreign currency for income tax purposes, which would permit bitcoin users to take advantage of the personal use exemption that applies to such currency. I conclude that it should not because the rationale for extending the personal use exemption to bitcoin is weak, at least from the government’s perspective. Moreover, expanding the definition of foreign currency could create significant line-drawing problems.

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Marian Presents The State Administration Of International Tax Avoidance Today At Pepperdine

Omri Marian (UC-Irvine) presents The State Administration of International Tax Avoidance at Pepperdine today as part of our Tax Policy Workshop Series:

This Article documents a process in which a national tax administration in one jurisdiction, is consciously and systematically assisting taxpayers to avoid taxes in other jurisdictions. The aiding tax administration collects a small amount tax from the aided taxpayers. Such tax is functionally structured as a fee paid for government-provided tax avoidance services. Such behavior can be easily copied (and probably is copied) by other tax administrations. The implications are profound. On the normative front, the findings should fundamentally change our understanding of the concept of international tax competition. Tax competition is generally understood to be the adoption of low tax rates in order to attract investments into the jurisdiction. Instead, this Article identifies an intentional “bagger thy neighbor” behavior, aimed at attracting revenue generated by successful investments in other jurisdictions, without attracting actual investments. The result is a distorted competitive environment, in which revenue is denied from jurisdictions the infrastructure and workforce of which support economically productive activity. On the practical front, the findings suggest that internationally coordinated efforts to combat tax avoidance are misaimed. Current efforts are largely aimed at curtailing aggressive taxpayer behavior. Instead, the Article proposes that the focus of such efforts should be curtailing certain rogue practices adopted by national tax administrations.

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Pepperdine Tax Policy Workshop Series (Spring 2016)

Here is the schedule for my Spring 2016 Pepperdine Tax Policy Workshop Series:

• Jan. 25    Omri Marian (UC-Irvine), The State Administration of International Tax Avoidance
• Feb. 8     Adam Chodorow (Arizona State), Bitcoin, Foreign Currency, and the Case for Basis Pooling
• Feb. 22   John Brooks (Georgetown), Quasi-Public Spending
• Mar. 7    Ellen Aprill (Loyola-L.A.),  The Section 527 Obstacle to Meaningful Section 501(c)(4) Regulation
• Mar. 28  Shuyi Oei (Tulane), The Tax Lives of Uber Drivers: Evidence from Internet Discussion Forums
• Apr. 11   Jason Oh (UCLA), How the Rich Drive Progressive Marginal Tax Rates
• Apr. 25   Lily Kahng (Seattle), Who Owns Human Capital?

I will of course blog each professor's paper on the day of their presentation.  Southern California professors and practitioners are welcome to attend any of the sessions (11:00 a.m. - 12:30 p.m.) -- just let me know.

• Pepperdine Tax Policy Workshop Series (Spring 2014)
• Pepperdine Tax Policy Workshop Series (Spring 2015)

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Field Presents Aggressive Tax Planning and the Ethical Tax Lawyer Today at Pepperdine

Heather Field (UC-Hastings) presents Aggressive Tax Planning and the Ethical Tax Lawyer at Pepperdine today as part of our Tax Policy Colloquium Series:

[H]ow should a tax planner, who wants to engage in “permissible tax planning” but not cross the line over into “unethical loophole lawyering,” exercise her discretion and judgment? This paper seeks to answer this question by drawing on both (a) the extensive literature on lawyering and professionalism and (b) the social science literature regarding factors that contribute to biased decision-making and unintentional lapses in judgment. The explicit incorporation of these strands of literature into the discourse on tax ethics helps each tax planner operationalize, on an individual basis and in a way that aligns with her values, both the general and tax-specific rules of professional conduct. The existing tax ethics literature primarily focuses either on how to comply with the rules governing practice or on how the rules should be improved. Thus, this paper contributes to the literature by focusing on the issues that the rules leave to the discretion of the tax practitioner (rather than on the issues that the rules address) and by approaching the discussion from a lawyering perspective20 (rather than from a policymaking perspective).

Specifically, this paper argues that a lawyer seeking to pursue a career as an ethical tax planner should identify and implement her philosophy of lawyering to help her make difficult discretionary decisions in a principled way, and when implementing that approach to lawyering, she should work to counteract the subtle factors that can skew her professional judgment. ...

Ultimately, this paper argues that an important part of being an ethical tax planner, particularly when dealing with contestable tax positions, includes being deliberate about how one approaches the task of giving tax planning advice and being self-aware about the ways in which one exercises judgment. By fleshing out the concept of ethical tax planning, I hope to give our students confidence and guidance as they embark on (hopefully, ethical) careers as tax planners, and I hope to ease the tension between tax academics’ scholarly work condemning aggressive tax planning and their classroom work, in which they often teach students how to use those same tax planning techniques. And perhaps this limited defense of the ethics of the tax planning profession can help to rehabilitate the public image of tax lawyers.

Update:  Post-presentation lunch:

Fleischer Presents Libertarianism and the Charitable Tax Subsidies Today at Pepperdine

Miranda Perry Fleischer (San Diego) presents Libertarianism and the Charitable Tax Subsidies at Pepperdine today as part of our Tax Policy Colloquium Series:

Although many Americans claim to subscribe to libertarian theories of justice, tax scholarship is largely silent about the interaction between libertarian principles and the structure of our tax system. This is not surprising, for what springs to mind when a legal academic hears the word “libertarianism” is Robert Nozick’s argument that taxation is slavery. If all taxation is indeed slavery, why bother analyzing libertarian principles for insights into our tax system? This dismissal, however, ignores the diversity of libertarian thought. To that end, this Article mines the nuances of libertarian theory for insights into one feature of our tax system: the charitable tax subsidies.

Exploring the nuances of libertarian theory yields some surprising results. Some strands of libertarian thought suggest that the charitable tax subsidies are in and of themselves illegitimate. These strands of libertarianism forbid not only redistribution but also anything except the most minimal provision of public goods needed to protect life and property, such as defense. Yet several other strands do see a role for the state to engage in a varying amount of redistribution or to provide varying amounts of public goods. On one spectrum are interpretations that admit that the state should play a role in providing public goods (strictly defined) and/or provide a provide a safety net to the very poorest but no more, and on the other is an interpretation of left-libertarianism that might support something akin to our current structure.

Update:  Post-presentation lunch:

Polsky Presents Private Equity Tax Games Today at Pepperdine

Gregg D. Polsky (North Carolina) presents A Compendium of Private Equity Tax Games at Pepperdine today as part of our Tax Policy Colloquium Series:

This paper will describe and analyze tax strategies, lawful and unlawful, used by private equity firms to minimize taxes. While one strategy — the use of “carried interest” — should by now be well understood by tax practitioners and academics, the others remain far more obscure. In combination, these strategies allow private equity managers to pay preferential tax rates on all of their risky pay (through carried interest), pay preferential tax rates on much of their non-risky pay (through management fee waivers and misallocations of their expense deductions), and push much of the residual non-risky pay down to their funds’ portfolio companies who, unlike the fund, can derive significant tax benefits from the resulting deductions (through monitoring fees and management fee offsets). 

Update:  Post-presentation lunch:

Oei Presents Can Sharing Be Taxed? Today at Pepperdine

Shu-Yi Oei (Tulane) presents Can Sharing Be Taxed? (with Diane M. Ring (Boston College)) at Pepperdine today as part of our Tax Policy Colloquium Series:

The past few years have seen the rise of a new model of production and consumption of goods and services, often referred to as the “sharing economy.” Fueled by startups such as Uber and Airbnb, sharing enables individuals to obtain rides, accommodations, and other goods and services from peers via the Internet or mobile application in exchange for payment. The rise of sharing has raised questions about how it should be regulated, including whether existing laws and regulations can and should be enforced in this new sector or whether new ones are needed.

In this Article, we explore those questions in the context of taxation. We argue that, contrary to the claims of some commentators, the application of substantive tax law to sharing is mostly (though not completely) clear, because current law generally contains the concepts and categories necessary to tax sharing. However, tax enforcement and compliance may present challenges, as a result of two distinctive features of sharing. First, some sharing businesses tend to opportunistically pick the more favorable regulatory interpretation if there is ambiguity regarding which rule applies or whether a rule applies. This leads to compliance and enforcement gaps. Second, the “microbusiness” nature of sharing raises unique compliance and enforcement concerns. We suggest strategies for addressing these dual challenges, including lower information reporting thresholds, safe harbors and advance rulings to simplify tax reporting, and targeted enforcement efforts.

Jordan M. Barry (San Diego) is the commentator.  For more, see Jordan M. Barry & Paul L. Caron, Tax Regulation, Transportation Innovation, and the Sharing Economy, 82 U. Chi. L. Rev. Dialogue ___ (2015).

Update:  Post-presentation lunch:

 

Kleinbard Presents We Are Better Than This Today at Pepperdine

Edward Kleinbard (USC) presents We Are Better Than This: How Government Should Spend Our Money at Pepperdine today as part of our Tax Policy Colloquium Series:

We Are Better Than This fundamentally reframes budget debates in the United States. Author Edward D. Kleinbard explains how the public's preoccupation with tax policy alone has obscured any understanding of government's ability to complement the private sector through investment and insurance programs that enhance the general welfare and prosperity of our society at large.

He argues that when we choose how government should spend and tax, we open a window into our "fiscal soul," because those choices are the means by which we express the values we cherish and the regard in which we hold our fellow citizens. Though these values are being diminished by short-sighted decisions to starve government, strategic government spending can directly make citizens happier, healthier, and even wealthier.

Expertly combining the latest economic research with his insider knowledge of the budget process into a simple yet compelling narrative, he unmasks the tax mythologies and false arguments that too often dominate contemporary discourse about budget policies. Large quantities of comparative data are succinctly distilled to situate the United States among its peer countries, so that readers can judge for themselves whether contemporary budget choices really reflect our aspirational fiscal soul,

Kleinbard's presentation takes a multi-disciplinary approach, drawing on economics, finance, law, political science and moral philosophy. He uniquely weaves economic research and moral philosophy together by emphasizing our welfare, not just our national income, and by contrasting the actual beliefs of Adam Smith, a great moral philosopher, with the cartoon version of the man presented by proponents of the most extreme forms of private market triumphalism.

Update:  Post-presentation lunch:

 

Caron Presents Faculty Scholarship Rankings and Law School Success Today at Pepperdine

Paul L. Caron (Pepperdine) presents Faculty Scholarship Rankings and Law School Success at Pepperdine today:

In What Law Schools Can Learn From Billy Beane and the Oakland Athletics, 82 Tex. L. Rev. 1483 (2004), Rafael Gely and I argued that legal education must use technology to develop more sophisticated measures of law school success and faculty contributions to law school success.  Here, I use existing measures of faculty scholarly output (publications) and influence (law review citations, Google Scholar citations (H-Index and M-Index), and SSRN downloads) both to chart how Pepperdine's faculty compares with our competitors and to detail individual Pepperdine faculty contributions in these measures.  I then offer some thoughts on what these existing ranking methodologies leave out in measuring faculty contributions to law school success.  I argue that religious law schools are uniquely positioned to thrive in the midst of the law school crisis because our faith-fueled commitment to our students and to each other empowers us to better define the pathways to success for our schools, our students, and our faculties and equips us to make that journey together.

Graetz Presents The Tax Reform Road Not Taken -- Yet Today at Pepperdine

Michael J. Graetz (Columbia) presents The Tax Reform Road Not Taken -- Yet, 67 Nat'l Tax J. 419 (2014), at Pepperdine today as part of our Tax Policy Colloquium Series:

The United States has traveled a unique tax policy path, avoiding value added taxes (VATs), which have now been adopted by every OECD country and 160 countries worldwide. Moreover, many U.S. consumption tax advocates have insisted on direct personalized taxes that are unlike taxes used anywhere in the world. This article details a tax reform plan that uses revenues from a VAT to substantially reduce and reform our nation’s tax system. The plan would (1) enact a destination-based VAT; (2) use the revenue produced by this VAT to finance an income tax exemption of $100,000 of family income and to lower income tax rates on income above that amount; (3) lower the corporate income tax rate to 15 percent; and (4) protect low and-moderate-income workers from a tax increase through payroll tax credits and expanded refundable child tax credits. This revenue and distributionally neutral plan would stimulate economic growth, free more than 150 million Americans from having to file income tax returns, solve the difficult problems of international income taxation, and remove the temptation for Congress to use tax benefits as if they are solutions to the nation’s pressing social and economic problems.

Update:  Post-presentation lunch:

Chodorow Presents Pope Francis, the Bible, and Tax Policy Today at Pepperdine

Adam Chodorow (Arizona State) presents Pope Francis, the Bible, and Tax Policy at Pepperdine today as part of our Tax Policy Colloquium Series:

1. What does the Bible actually say, either directly about taxes and tax-like institutions or indirectly about principles that should guide policymakers, regarding an appropriate tax system?
2. To what extent should the Bible or religious views guide votes or opinions on such secular policy matters?

Biblical Tax Systems and the Case for Progressive Taxation, 23 J.L. & Relig. 53 (2008):

With the political rise of the religious right, American policymakers have increasingly looked to religion for guidance on important policy issues, including questions of distributive justice and how best to allocate tax burdens. While many claim that Judeo-Christian values require progressivity, the examples of taxation found in the sacred texts apparently refute this claim. This article examines four examples of taxation found in the Bible and Talmud to determine whether it is appropriate to infer from them a Judeo-Christian principle of tax fairness that should apply in a modern, secular tax system. I find that, not only do these examples use different methods for allocating tax burdens, making it impossible to identify one principle, but, more important, each example bears the stamp of its religious purpose or historical circumstances, making it inappropriate to rely on these examples as evidence of a divinely-sanctioned principle of tax justice.

Adam's visit is sponsored by Pepeprdine's Diane and Guilford Glazer Institute for Jewish Studies.

Update:  Post-presentation lunch:

Pepperdine Tax Policy Workshop Series (Spring 2015)

Here is the schedule for my Spring 2015 Pepperdine Tax Policy Workshop Series:

• Jan. 14    Adam Chodorow (Arizona State), Pope Francis, the Bible, and Tax Policy
• Feb. 2     Michael Graetz (Columbia), The Tax Reform Road Not Taken -- Yet
• Feb. 18   Ed Kleinbard (USC), We Are Better Than This: How Government Should Spend Our Money
• Mar. 2    Shu-Yi Oei (Tulane), Human Equity? Regulating the New Income Share Agreements
• Mar. 23  Gregg Polsky (North Carolina), Private Equity Tax Games
• Apr. 6     Miranda Fleischer (San Diego), Libertarianism and the Charitable Tax Subsidies
• Apr. 20   Heather Field (UC-Hastings), Aggressive Tax Planning and the Ethical Tax Lawyer

I will of course blog each professor's paper on the day of their presentation.  Southern California professors and practitioners are welcome to attend any of the sessions (11:00 a.m. - 12:30 p.m.) -- just let me know.

Pepperdine Tax Policy Workshop Series (Spring 2014)

Barry Presents PPL and the Arbitrary Foreign Income Tax Credit Today at Pepperdine

Jordan M. Barry (San Diego) presents PPL and the Arbitrary Foreign Income Tax Credit at Pepperdine today as part of its Tax Policy Colloquium Series hosted by Paul Caron:

Last year, the Supreme Court decided PPL v. Commissioner, ruling that the United Kingdom’s windfall tax qualifies for a U.S. foreign income tax credit. Even though the windfall tax only applies to a handful of taxpayers, economists and tax experts nationwide closely followed the PPL litigation: The foreign income tax credit a key provision of the U.S. tax code and a major component of U.S. economic policy. The rules surrounding the foreign income tax credit are quite intricate, and there is relatively little authoritative guidance to help taxpayers navigate them. And since the Supreme Court decides foreign income tax credit cases so rarely, the Court’s reasoning in PPL will likely influence courts’ thinking—and taxpayers’ pocketbooks—for many years to come.

Unfortunately, the Court’s decision in PPL does little to clarify the law and guide taxpayers. Instead, it reveals the fundamentally arbitrary nature of the foreign income tax credit.

The Court justifies its ruling as a triumph of substance over form. But the Court’s opinion itself demonstrates how two taxes can be the same in substance, yet be treated quite differently for purposes of the foreign income tax credit. The Court describes a specific hypothetical tax that would not be creditable—yet there are multiple taxes that are substantively identical to the Court’s hypothetical tax, but qualify for significant foreign income tax credits.

This Article explores these conceptual problems with the foreign income tax credit, as demonstrated by PPL, and suggests several ways in which Congress and the IRS might wish to ameliorate them.

Update: Post-presentation lunch:

Fleischer Presents Innovation, Equity Compensation, and the New Inequality Today at Pepperdine

Victor Fleischer (San Diego) presents Sweat Equity: Innovation, Equity Compensation, and the New Inequality at Pepperdine today as part of its Tax Policy Colloquium Series hosted by Paul Caron:

How people get paid—not just how much—explains the rising income inequality in the United States. Company founders, corporate executives, real estate developers, venture capitalists, and private equity fund managers often get paid in “sweat equity.” In exchange for labor, they receive equity in a venture largely financed with other people’s money. Globalization, technological change, and other factors have created economic conditions such that when companies are successful, those with sweat equity can receive unprecedented increases in income and wealth, and these gains are increasingly concentrated among a select few. For the rest of us, wages have stagnated.

The culture of equity-based pay has proven highly successful as a solution to the fundamental problem of entrepreneurial economics: how to get people with financial capital to share it with those who have the talent, motivation, and ideas. From the oil fields of Texas to the garages of Silicon Valley and the trading desks and boardrooms of Wall Street, sweat equity aligns the incentives of managers and investors. It is the engine of American innovation and economic growth.

But sweat equity is also rocket fuel for economic inequality. Economic gains increasingly flow to a lucky and talented elite, the one percent of the one percent, leaving everyone else behind. Our tax code aggravates the inequality problem, leaving sweat equity lightly taxed while taxes on wages have increased dramatically. The common recommendation of the political left—raise taxes on the rich—misses the target by focusing on ordinary income rather than sweat equity.

Addressing the problem of inequality will require finding fair methods of redistribution that do not disrupt the complex economic, legal, institutional and cultural infrastructure that forms the foundation for American innovation and entrepreneurship. Possibilities include redesigning the capital gains tax, adopting a progressive consumption tax, redesigning the estate tax, and increasing incentives for charitable giving. We must achieve enough redistribution to ensure some social mobility and some equality of opportunity, but not so much that the next generation of founders finds the risk and reward of entrepreneurship unattractive.

Update:  Post-presentation lunch:

Lawsky Presents How Tax Models Work Today at Pepperdine

Sarah B. Lawsky (UC-Irvine) presents How Tax Models Work, 54 B.C. L. Rev. 1657 (2012), at Pepperdine today as part of its Tax Policy Colloquium Series hosted by Paul Caron:

Unlike many social and physical sciences, legal scholarship includes little or no discussion of what models mean, how they are connected to the real world of law and policy, or how they should, and should not, be used by legal scholars. This void exists notwithstanding legal scholarship’s increasing reliance on explicit modeling in fields such as law and economics. This Article uses the example of economic modeling in tax scholarship to investigate how legal scholarship uses models, and how models in legal scholarship work. The Article lays out a path between two extremes. At one extreme is scholarship that employs models without either reflection or self-consciousness to make real-world recommendations; at the other is scholarship that rejects models because their assumptions are too far from reality. This Article argues that neither approach is correct. Models are useful and important for legal scholarship, but not in the way that some critics and proponents seem to believe. Drawing from literature in the philosophy of science, this Article argues that we reason from economic models through a mix of deductive and ampliative logic, through leaps, creativity, and intuition. Models cannot provide certainty about what the law should be; rather, economic models are merely one kind of voice in an ongoing and necessarily inconclusive conversation. This Article concludes by drawing on this deeper understanding of models and modeling to propose ways that legal scholarship can and should use economic models.

See also Sarah B. Lawsky, Modeling Uncertainty in Tax Law, 65 Stanford L. Rev. 241 (2013).

Update: Post-presentation lunch:

Galle Presents Nonprofit Executive Pay as an Agency Problem Today at Pepperdine

Brian D. Galle (Boston College) presents Nonprofit Executive Pay as an Agency Problem: Evidence from U.S. Colleges and Universities (with David I. Walker (Boston University)) at Pepperdine today as part of its Tax Policy Colloquium Series hosted by Paul Caron:

We analyze the determinants of the compensation of private college and university presidents from 1999 through 2007. We find that the fraction of institutional revenue derived from current donations is negatively associated with compensation and that presidents of religiously-affiliated institutions receive lower levels of compensation. Looking at the determinants of contributions, we find a negative association between presidential pay and subsequent donations. We interpret these results as consistent with the hypotheses that donors to nonprofits are sensitive to executive pay and that stakeholder outrage plays a role in constraining that pay. We discuss the implications of these findings for the regulation of nonprofits and for our broader understanding of the pay-setting process at for-profit as well as nonprofit organizations. 

Brian D. Galle (Boston College) & David I. Walker (Boston University), Sunshine, Stakeholders, and Executive Pay: A Regression-Discontinuity Approach:

We evaluate the effect of highly salient disclosure of private college and university president compensation on subsequent donations using a quasi-experimental research design. Using a differences-in-discontinuities approach to compare institutions that are highlighted in the Chronicle of Higher Education’s annual "top 10" list of most highly-compensated presidents against similar others, we find that appearing on a top 10 list is associated with reduced average donations of approximately 4.5 million dollars in the first full fiscal year following disclosure, despite greater fundraising efforts at "top 10" schools. We also find some evidence that top 10 appearances slow the growth of compensation, while increasing fundraising and enrollment, in subsequent years. We interpret these results as consistent with the hypothesis that donors care about compensation and react negatively to high levels of pay, on average; but (absent highly-salient disclosures) are not fully informed about pay levels. Thus, while donors represent a potential source of monitoring and discipline with respect to executive pay in the nonprofit sector, significant agency problems remain. We discuss the implications of these findings for the regulation of nonprofits and for our broader understanding of the pay-setting process at for-profit as well as nonprofit organizations.

Update:  Post-presentation lunch:

 

Osofsky Presents Beyond Worst-First Tax Enforcement Today at Pepperdine

Leigh Osofsky (Miami) presents Beyond Worst-First Tax Enforcement at Pepperdine today as part of its Tax Policy Colloquium Series hosted by Paul Caron:

When enforcement resources are limited, how should the scarce enforcement resources be allocated to maximize compliance with the law? The answer to this question can determine to what extent the law on the books translates to the law in practice. A dominant school of thought in the tax literature suggests that they should be allocated based on a “worst-first” method, whereby the individuals likely to be most noncompliant are targeted. However, “worst-first” methods suffer some underappreciated weaknesses. While “worst-first” methods can encourage all individuals to increase compliance so as not to be deemed the “worst,” they can also provide cover to engage in noncompliance that is perceived moderate for the relevant population. This dynamic can become most problematic in highly noncompliant populations. In such populations, existing, high levels of noncompliance, and underlying, structural causes of the high noncompliance can serve as coordinating mechanisms, providing mutual assurance of low compliance. Moreover, “worst-first” theories do not provide a comprehensive explanation for the group and project-based enforcement practices that are found in a number of actual enforcement settings. In response to these deficits in existing theory, I draw on work from across different disciplines to develop a new layer of analysis regarding the allocation of scarce tax enforcement resources. I suggest that, under certain conditions, deterrence can be enhanced by allocating scarce enforcement resources among a low-compliance population of taxpayers through a process I call microdeterrence. After setting forth the theoretical case for microdeterrence, I examine how it might apply in the cash business tax sector, a setting that presents particular challenges for “worst-first” methods. I conclude that microdeterrence may increase compliance, meriting its application and empirical evaluation. More fundamentally, this Article underscores the importance of the allocation of scarce enforcement resources, some of the deficits in existing theory, and the potential benefits of integrating additional layers of analysis.

Update:  Post-presentation lunch:

Caron Presents Revitalizing the Estate Tax: Five Easy Pieces Today at Pepperdine

Paul L. Caron (Pepperdine) presents Revitalizing the Estate Tax: Five Easy Pieces, 142 Tax Notes ___ (2014) (with James R. Repetti (Boston College)) at Pepperdine today as part of its Faculty Workshop Series:

In The Estate Tax Non-Gap, Why Repeal a Voluntary Tax?, 20 Stan. L. & Pol'y Rev. 153 (2009), we argued that, contrary to the state of the law over thirty-five years ago when George Cooper wrote his seminal article,  A Voluntary Tax? New Perspectives on Sophisticated Estate Tax Avoidance, 77 Colum. L. Rev. 161 (1977), taxpayers today generally “can reduce the value of assets subject to transfer tax in many instances only if they are willing to assume the risk that the reduction may be economically real and reduce the actual value of assets transferred to heirs or, alternatively, in narrow situations if they are willing to incur some tax risk.”  In Occupy the Tax Code: Using the Estate Tax to Reduce Inequality and Spur Economic Growth, 40 Pepp. L. Rev. 1255 (2013), we documented the dramatic increase in income and wealth inequality over the past thirty years and the accompanying adverse social consequences and long-term negative impact on economic growth.  We argued that tax policy historically has played an important role in reducing inequality and that the estate tax is a particularly apt reform vehicle in light of the role of inherited assets among the very rich and the adverse economic effects of such inherited wealth.  In this article, we advance five estate and gift tax reform proposals that will generate needed revenue, reduce inequality, and contribute to economic growth: (1) disallow minority discounts where the transferred asset or business is controlled by family before and after the transfer; (2) maintain parity between the unified credit exemption amount for the estate tax and gift tax; (3) reduce the wealth transfer tax exemptions to $3.5 million, increase the maximum tax rate to 45 percent, and limit the GST exemption period to 50 years; (4) restrict the ability of gifts made in trust to qualify for the gift tax annual exclusion; and (5) impose a lifetime cap on the amount that can be contributed to a Grantor-Retained Annuity Trust (“GRAT”).

Winchester Presents Carried Interest for the Common Man Today at Pepperdine

Richard Winchester (Thomas Jefferson) presents Carried Interest for the Common Man at Pepperdine today as part of our Tax Policy Colloquium Series:

In recent years, the public has become increasingly aware of the compensation arrangement known as carried interest, which permits private equity fund managers to pay tax at obscenely low rates on obscenely high earnings for their work. The publicity has led Congress to consider no fewer than eight separate pieces of legislation since 2007 to increase the tax on carried interest. Much of the energy behind this movement seems to be grounded in a concern that the tax system currently allows certain rich individuals to gain an advantage that is not available to anyone else. However, that is not entirely accurate. For years, huge numbers of ordinary self-employed people have been able to limit the tax on their earnings when they conduct their business through a formal business entity instead of as a sole proprietor. These business structures produce the same objectionable results as a carried interest arrangement. They just happen to be utilized by the common man. It is long past time for Congress to address this inequity in a comprehensive way with the same energy that it is devoting to addressing the taxation of carried interest.

Update:  Post-presentation lunch:

 

Chodorow Presents Pope Francis, the Bible, and Tax Policy Today at Pepperdine

Adam Chodorow (Arizona State) presents Pope Francis, the Bible, and Tax Policy at Pepperdine today as part of our Tax Policy Colloquium Series:

1. What does the Bible actually say, either directly about taxes and tax-like institutions or indirectly about principles that should guide policymakers, regarding an appropriate tax system?
2. To what extent should the Bible or religious views guide votes or opinions on such secular policy matters?

Biblical Tax Systems and the Case for Progressive Taxation, 23 J.L. & Relig. 53 (2008):

With the political rise of the religious right, American policymakers have increasingly looked to religion for guidance on important policy issues, including questions of distributive justice and how best to allocate tax burdens. While many claim that Judeo-Christian values require progressivity, the examples of taxation found in the sacred texts apparently refute this claim. This article examines four examples of taxation found in the Bible and Talmud to determine whether it is appropriate to infer from them a Judeo-Christian principle of tax fairness that should apply in a modern, secular tax system. I find that, not only do these examples use different methods for allocating tax burdens, making it impossible to identify one principle, but, more important, each example bears the stamp of its religious purpose or historical circumstances, making it inappropriate to rely on these examples as evidence of a divinely-sanctioned principle of tax justice.

Update:  Post-presentation dinner:

Pepperdine Tax Policy Workshop Series (Spring 2014)

One of the many joys of my new life at Pepperdine is the opportunity to teach Tax Policy for the first time in my career.  Inspired by Leandra Lederman's discussion on this blog in 2008-09 of the ideal structure for a tax workshop series, and the experience of over a dozen law schools with such a series (Boston College, Columbia, Connecticut, Indiana, Loyola-L.A., Michigan, NYU, Northwestern, Pennsylvania, San Diego, Toronto, UCLA, and Washington), I'm delighted to have 19 Pepperdine students embark on the journey with me this semester.  I've divided the course into seven two-week chunks, focused on a tax professor's paper:

• Jan. 15:   Adam Chodorow (Arizona State)
• Feb. 3:    Richard Winchester (Thomas Jefferson)
• Feb. 12:  Leigh Osofsky (Miami)
• Mar. 3:   Brian Galle (Boston College)
• Mar. 24: Sarah Lawsky (UC-Irvine)
• Apr. 7:    Vic Fleischer (San Diego)
• Apr. 21:  Jordan Barry (San Diego)

I will of course blog each professor's paper on the day of their presentation.  SoCal professors and practitioners are welcome to attend any of the sessions (11:00 a.m. - 12:30 p.m.) -- just let me know.